Talk to the hand: why women "switch off" over money

November 11, 2009

Financial literacy reports continue to tell us that Australian women simply “switch off” when it comes to finance. The Women Understanding Money report found 52% of women find dealing with money stressful and overwhelming, 25% have absolutely no savings for retirement and of the women who do invest, only 5% look at a company’s background information. Is this switch off factor just because we find talking about money boring and unimportant, or is there something else going on?

I spoke to a group of women during the week about some of the basic principles of finance. Invitations to this event were extended exclusively to high-earning, independently successful women. Initially it worried me that I was asked to talk through the basics to such a well-established group, but the audience was large and interested.

It reminded me that the reason my co-author and I decided to write Flirting with Finance - a book designed to educate women about finance in a way that didn’t make their eyes glaze over - was because we had observed through our work and our friendship circles that many women, including highly intelligent, highly educated and successful corporate and entrepreneurial women, weren’t really tuned in to their own personal finance situation.

And with lack of interest, comes “switch off” - or quite simply, inaction. And lack of financial security can have dire consequences upon women’s independence and ability to make their own choices.

The financial literacy statistics are continually supported by individual stories. One woman I chatted with just before I gave the presentation this week told me she worked in a financial services organisation but didn’t have any of her own investments.
Another woman said she was so busy building her business she didn’t have time to tune into her personal finances and investments.

At the end of my talk, question time evolved into discussion time, in the wonderful way women communicate when we get together.

One woman raised the possibility that the reason women don’t tune into their personal finances as much as men do might be because of our different ways of measuring success. She said that men, from a very young age, compare their salaries and the increasing value of their investment portfolios, and are more likely to spend money on expensive cars as a symbol to the world that they are a success.

Someone else in the audience said that women spend so much time worrying about their children, partners and parents, they seldom have time left over to focus on themselves, including their own finances and investments.

Women do have a historical exclusion from dealing with money in Australia’s not-too-distant past. In the 60s women who worked in government jobs had to leave their position once they were married. In the 70s a woman would struggle to get a mortgage in her own name. One academic I interviewed while researching my book told me she had held a store card in her own name while she was an undergraduate student, but once she got married the store cancelled her card and sought her husband’s permission before reissuing her with a new one. Many women grew up with the expectation that women would rely on men for their financial security.

But how is this affecting how women deal with money today? Women are now much more independent, both socially (there’s more single women than married women in Australia now), and financially. But the statistics and the stories continue to suggest that we’re just not rolling up our sleeves and getting into our personal finances.

And it’s not that men don’t want us to. One senior corporate guy I was chatting to said he couldn’t understand why his wife didn’t take any interest in their joint investments. He said she earned double what he did (and he would have been on a huge salary), and that while they had a great relationship and he wasn’t doing anything shonky, he said he could be if he wanted to, and she wouldn’t know, or seemingly care at all about it.

Research shows that women are good at managing the household budget and controlling spending, but this doesn’t extend to making investment or superannuation decisions.

Is this because women lack the confidence, the experience or the interest? And what can we do to change this?

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Recent comments

marian

January 02, 2010

10:03 PM

I am shocked by some of the sexist rhetoric on this site. Women should rely on their husbands and brothers? What the? I know many single women in their 30's who are all over their careers and finances; and are doing very well thank you very much. Attitudes that women shouldn't know about finances or are somehow incapable of handling finances are most likely holding some women back. We all need to change our attitudes, so that all women feel looking after finances is doable and normal. Just the way women in this era feel that taking charge of their education and career is doable and normal.

YaYan

December 15, 2009

11:27 AM

Tootsie, there is no lack of books and website to look at to help.
My parents are very old fashioned and believe you a wealthy if you pay off your home. In our day and age, its not enough.
A good book to have a look at is:
Rich dad poor dad - Robert Kiyosaki

This book got me thinking differently about money and got me into financial planning and I also have my own business.

Your boyfriend is much like me, expensive taste and likes spending money...

2 options: reduce spending and watch your money... or... build an asset and earn more money so you can buy what you like.

Life is short... whats the point in saving money if there is no guarantee you will have the opportunity to enjoy it.

For me, work is a short term thing... while i build enough assets so that I can live to work... not work to live.

Money wont buy you happiness but it certainly will buy a lot of concenience

Weak dreans inspire weak efforts and results

Wish everyone the best in life, what ever that means to you.

Ailie

November 25, 2009

11:53 AM

I feel it's nothing more than a changing of the times. History shows that women haven't a long history of dealing with money, most mothers therefore wouldn't have that knowledge to pass onto their daughters.

If you'll notice, younger women today are a lot more astute with money than their male counterparts. In our relationship, I'm the one who thinks ahead whilst my partner only looks at his current bank balance. Eventually more women will get better at it as they discover the need to think about it.

As for financial products, it's simply a lack of knowledge

Yo

November 13, 2009

11:10 AM

Have it occurred to you that we are not interested in making money investing? Maybe there are people that think that investing is a high-risk, and not a 100% in line with how we stand in life. That does not mean we do not save or we are not money wise .I think this only builds an misleading stereotype.

Lu

November 13, 2009

10:25 AM

I'm 27 and more financially aware than my boyfriend of 5 years. I'm more careful with money and even at times when he has been earning more than me I have still had more savings to hand. I definitely find finance interesting, but the tough part is getting started.

Engaging the help of a financial planner is actually harder than it should be. It's difficult to weed out the really astute people from those that are just keen to earn their commissions from the products they sell you.

Even though I'm good at working through the marketplace to get the best deal for everything else, shopping for financial services is surprisingly complicated.

RoskowMR

November 13, 2009

09:06 AM

What can be done to change this? Keep doing what you're doing Anneli, re-writing the issues in a way that people can understand. Growing up we're not taught enough about money at school, this need to change, but it needs to be written in a way that doesn't make one's eyes glaze over and it needs to be practical - a little bit at a time that people can apply straight away.

PA

November 13, 2009

08:46 AM

There are numerous, 'real' reasons women, on average, have little or no interest in money:

1. The financial services industry is dominated by 50+ year old men who have no idea how to relate to women regarding finance. These financial planners focus on returns, outperforming markets, etc. They typically encourage more risk than less (this is not, in itself a bad thing, in many cases).
2. In light of point 1. women over 45/50 are typically more risk averse than their male partners and their financial planners. This attitude is rarely accommodated.
3. It is true that women do have more of a nurturing role and therefore see finance as something to be managed rather than planned for. Hence, women control the purchasing decisions in many households, but not the inveting decisions.
4. Further to points 1 & 2, men take more risks, and all financial literature is largely targeted at this.
5. Younger people, in general, have a difficult time in planning for the future - they prefer to borrow heavily now (for property or consumables) and focus on managing the debt rather than future planning.
6. Older women (60+) were rarely superannuated, were rarely clients of accountants and planners and were often simply another signatory (when required) to the different accounts. Sad but true.

The above comments are generalisations, and before people come in saying "you're wrong cause me and my friend blah blah blah..." I don't care because you can't extrapolate from your small sample.

My observations abover come from working as a male,

Tootsie

November 12, 2009

05:37 PM

For starters where do you learn these 'money skills'? My parents were always saying they didn't have enough money so that idea has passed on to me even when I know I have enough I'm still worried I don't. So it is a serious question, if you've never been taught how to handle money wisely where can you go for advice? And secondly, it's my boyfriend who spends money not me. I could go 1 to 2 months, if not longer, without buying something just because I want it. Whereas my boyfriend would shrivel up and die if he could not buy something at least once a week. Our local shopping centre is his second home.

chrissy

November 12, 2009

04:11 PM

The points/comments the writer made are so true - better believe it girls. Women are generally just not cut out to handle money and big financial decesions. There are rare exceptions - I know. Better get yourselves a good guy or rely on Dad or your brother.

astral

November 12, 2009

10:03 AM

Because women play a more nurturing role in society their responsibilities to others are greater. Keeping up relationships, spending money on appearance to attract the opposite sex (which can take vast amounts of money), decorating your house, and giving your time to others in general are things that usually take precedent over finances. I work in finance, in investments, and while I have been exposed to financial matters I would probably have never bothered learning about, I know that at the end of the day, working out another budget, looking at numbers, meticulously planning my financial future is the last thing I want to do because itís not what brings meaning to my life.

RichChick

November 12, 2009

08:25 AM

Seems like Australian women and American women are in very similar places when it comes to investing. Building awareness and making it fun is the key to sparking the interest of women to take action that will benefit them long term. Fantastic article - keep it up!

Frank

November 12, 2009

04:17 AM

despite males' incomprehension, for ages women have been best financially rewarded for optimising their appearance with makeup and clothes to attract the highest status/wealth man, so the apparent frippery is actually grounded in a practical investment strategy.

My partner is worth very little, and earns very little working part time (no kids), yet stands to inherit $2.5m of my assets if I kark it, basically in exchange for cooking and washing for me - looks like a pretty good plan to me !

maggie

November 11, 2009

08:37 PM

At the moment I'm at home with my young daughter and hoping to find work next year since I have found a childcare placement for my daughter. I don't at the moment earn any money so I don't believe I have any money to invest. My husband tells me it is our money and not just his, but because I did not earn it I feel that it is his money and I use his money. Logically I know that is wrong but emotionally that is how I feel. I wonder if many women see the money as the mans and if they take a fair few years off child rearing don't invest because they have no money to invest. Does the gap in a woman's workforce participation due to children result in them believing that the man is responsible for the money and they the woman is not? Is it because if they started a portfolio it would have to stop as their wage stops?

NoNameBrand

November 11, 2009

08:19 PM

Young woman have what men want so they can just pout and get more $$.... Until they get old and wrinkly (wrinkles look good on kind people - terrible on the self-absorbed and bossy) and men get better and better looking. fortunately the law then allows them to take >50% - the lazier and less they have contributed, the more they get. it is a womans world

Veritas

November 11, 2009

06:07 PM

To get your darling to take money seriously all you have to do is arrange a fake bankruptcy and spend a couple months with services getting cut off, eating cheap and so on. She'll leave or get with the program. Either way, you're a winner.

Pro Equality

November 11, 2009

05:16 PM

What can we do to change this?
...We can (should) shift our collective notion of what it means, and perhaps more importantly what it feels like, to be a successful woman. Yes, she should have power and choices, but she should also understand the power and choices that flow from being financially cleu. For example, the wife of Anneli's senior corporate guy is doubtless considered extremely accomplished in her field, and probably has a shoe collection to die for, but it seems to me she would be embarrassed if her financial illiteracy/disinterest was widely known among her peers.

Similarly, a 'super mum' who squeezes an incredible amount into her day but sweeps all mail with a window aside perhaps should not be so highly congratulated if her ignorance about finances effectively means that she is not providing for her family as richly as she could. As with many things, it seems a matter of balance and the importance we attach to certain achievements.

Unfortunately, we women seem to self-impose the 'money-clueless' gender role to an extent (probably because we feel enough pressure trying to keep everything else under control and welcome any form of contribution from the man of the house). Even if it is a comfortable allocation of responsibilities, as the statistics show, it often lets women down ultimately.

I look forward to a time when being fiancially savvy will be seen as a sexy attribute and an important life skill which every woman works hard to nurture, regardless of her income or circumstances and with or without assistance from a partner.

Killer Bees

November 11, 2009

04:41 PM

My mother is a baby boomer and she does the "eyes glaze over" thing all the time. She only has about $60K in Super and about $1K in an online savings account. I work for financial planners so I'm very aware of the need to take charge of my own money, especially being a woman as well. Every time I try to engage her, she tunes out. But I finally managed to get her to salary sacrifice $5K of her pay into super.

I guess Rome wasn't built in a day.

Sparky

November 11, 2009

04:07 PM

Ash wrote "Then again, we don't have any money to invest, so I don't need to ask myself whether I trust my husband's judgment more than my own!"...

There is a critical error in your thinking Ash. If you are waiting to wake up one day and find yourself swimming in money before deciding to learn about investing and financial control then it's never going to happen.

Your challenge should be to sit down this month and find $100 (or $500) that you can invest. The first step to financial wisdom is to learn four things about yourself:

Income : What do you earn / receive?
Expenses : Where does it all go?
Assets : What do you own?
Liabilities : What do you ose to people?

If you do this properly you will most likely discover that you do have money to invest. Good luck with your discovery process.

Jojo

November 11, 2009

03:46 PM

As I read this article, I was already dismissing your findings in my head - and then I read some of the comments and started to see your point of view. Being smart with your finances is not simply a matter of controlling your expenditure, it is also to do with thinking about the long term, understanding how much money you would need to put into super to enjoy a certain level of lifestyle in your retirement. When my parents retired, my mum undertook a course at the stock exchange regarding investing. She attends all the meetings to do with their financial advisors and is just as active as my father in any of the big dollar decisions.

Sam

November 11, 2009

03:32 PM

Women will pay $1 for a $2 item she doesn't need, men will pay $2 for a $1 item he does need.

This truism doesn't take into account that a man rarely "needs" items, as in once a year for a pair of jeans while a woman can and does "bargain" shop regularly. A man is commonly going to spend that extra money on a top shelf item, rather than a bargain because he doesn't want to come back to the shop in 6 months time to get a new one, while a woman is likely to buy something with a use by date well within 6 months in order for an excuse to go shopping again.

Don't believe me? I have an 1x2 metre wardrobe at home that fits ALL my clothes, shoes, CDs, fans, note books and other tid bits. She uses the spare room for all of hers and is now asking, due to her recent "bargains", if I have any space in my wardrobe. She has more shoes than there are feet in australia.

diana

November 11, 2009

03:30 PM

At about 28 I decided I'd better get some credit cards etc in case I stayed single. I didn't marry until I was 34 so I kept them in my name - important for older women. People get their lessons at different times, eg widows finding they have no credit history as everything was in joint names. I inherited the family investment company and now love running the share portfolio and have more tolerance for risk than my husband.It is difficult trying to educate my kids who are more indulgent. They think nothing of getting bank fees for using the wrong ATM. All women should be aware of how much they owe and not have credit card debt at exorbitant interest rates. Buy shares in the bank instead! As women tend to live longer than men we really need to pay attention to our future situation, especially as the most medical expenditure occurs in the last few years of your life. But don't bet the house away!

wordofprey

November 11, 2009

03:18 PM

I respectfully disagree with the findings. Among my circle of financially independent girlfriends, it is often women who research and instigate investment decisions. Perhaps this is a generation gap - I cannot fathom that any of my 25-35 y.o. friends making double of their partner's income blissfullly ignoring the way their money is invested. Sorry, but this article seems to undermine modern women and does not make any sense to me. I just cannot relate to it.

Anna

November 11, 2009

03:05 PM

And the Game Consoles, sports cars and similar that men spend their money on isn't wasteful??

While I am like many women, and have no interest in money and what I spend, this is NOT because ignorance is bliss in respect to silly shoes or useless skin creams. In fact, I spend next to nothing on these types of items, as I'm sure a fair amount of women do.

Nothing like someone putting their own gender into a certain box - thanks Sarah.

Ash

November 11, 2009

02:55 PM

For me it's about risk-taking. Managing the household budget (and controlling my husband's expediture on expensive shoes and face creams) doesn't require me to take a leap, while making investment decisions would seem like an expensive risk. Then again, we don't have any money to invest, so I don't need to ask myself whether I trust my husband's judgment more than my own!

annie

November 11, 2009

02:27 PM

I love it! Sarah's comment. So true. Women want so much frivolous rubbish that it doesn't leave much to invest. Also my theory is that while little boys are in the school yard are learning to trade, negotiate and assess the value of their pokemon cards on the open market maybe little girls aren't. With my first daughter I didn't buy her Pokemon cards, but after thinking about exactly this topic I decided to buy these darned things for my much younger son and daughter in the hope that they learn these trading skills. Back in my day it was baseball cards (I grew up in the US) and my mother didn't buy me any either. It's been a long road to financial awareness. Robert Kyosaki helped too.
annie

Sarah

November 11, 2009

01:17 PM

Maybe them choosing to ignore finances is because they know that if they DID do some budgeting and financial due diligence, they would not be able to ignore the money wasted on silly shoes, useless skin creams, ridiculous hats for the first week of Nov, or large volumes of unneccessary clothes.
Ignorance is bliss - if you don't do your budgeting, you don't have to confront your wastefulness.

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Strap on those stilettos and sharpen up your finances… journalist and writer Anneli Knight is a mission to help women deal with the bottom line. A regular contributor to The Age and the Sydney Morning Herald, Anneli Knight is the co-author of Flirting with Finance, a book on women and finance. She has worked as an intellectual property lawyer at Blake Dawson and in various roles at stockbroking firm Goldman Sachs JBwere.